Explanation:
Analysis of each option:
Option A (TRUE): The spread is the difference between the ask and bid: $1.4304 - $1.4296 = $0.0008, which equals 8 pips (a pip is 1/10,000 or 0.0001 in most currency pairs).
Option B (TRUE): From the perspective of an American trader, the domestic currency is USD. EUR/USD 1.4296 means $1.4296 per €1 — this expresses the price of foreign currency (EUR) in terms of domestic currency (USD), which is the definition of a direct quote from the American perspective.
Option C (TRUE): The bid price (at which the market maker buys EUR) is $1.4296, and the ask price (at which the market maker sells EUR) is $1.4304. Therefore, a customer can sell one Euro for $1.4296 and buy one Euro for $1.4304.
Option D (FALSE): The spot rate moved from EUR/USD 1.4296/1.4304 to 1.4416/1.4424. This means it now takes MORE US dollars to buy one euro (1.4416 vs 1.4296). When more USD is required to purchase one EUR, the EUR has strengthened (appreciated) and the USD has weakened (depreciated). This statement reverses the correct interpretation, so it is the EXCEPT answer.
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Question 191.1. The spot foreign currency exchange rate is EUR/USD $1.4296/$1.4304. Each of the following is true about this quote EXCEPT:
A
The spread is 8 pips
B
If the domestic currency is the US dollar (USD), from the perspective of an American trader, as EUR is the base currency and the USD is the quoted currency, this is a direct quote
C
We can buy one Euro for $1.4304 and sell one Euro for $1.4296
D
If the spot rate changes to EUR/USD $1.4416/$1.4424, then the EUR has weakened, and the USD has strengthened
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